Endogenous Changes in Property Rights Regime

Abstract

The purpose of this article is to present a model of the endogenous evolution of a society's property rights regime. We use an overlapping-generations framework in which capital accumulation takes place. Property rights enforcement is costly. Individuals decide collectively in each period the appropriate level of enforcement and pay taxes to finance it. Poor households have less interest in the enforcement of property rights than rich households. We also consider heterogenous households with different tastes. They differ on their choice of law enforcement. As their wealth and numbers evolve, political power may change sides, hence the property rights regime also evolves.